Sallie Mae 2005 Annual Report Download - page 4

2SLM CORPORATION ANNUAL REPORT 2005
$850 million in direct-to-consumer education loans in
2005 — well above even our own optimistic plans.
In 2005, the company also witnessed an unprecedented
level of federal loan consolidation, which was driven by a
1.9 percentage point increase in interest rates on July 1. The
increased amount of consolidation loans in our portfolio—
roughly 62 percent of our total managed guaranteed portfolio
at December 31—has lengthened the average life of our
assets to 8.3 years.
Our success in growing loan originations is due in large
part to Sallie Mae’s 400-member campus-based sales
force. These seasoned professionals provide service to
more than 6,000 colleges and universities. In 2005, we
added our graduate and professional schools sales team,
launched a community college initiative and expanded our
services to Historically Black Colleges and Universities and
Hispanic-serving institutions. We recognize that different
higher education institutions have different needs and we
are committed to responding to them with tailored support
and expertise.
Fee-based Businesses
We have continued to grow our fee-based businesses hand-
somely. These businesses accounted for 32 percent of our core
earnings revenues last year, compared to 9 percent in 1999.
Our debt-management operation (DMO) grew revenues
55 percent in 2005. Today, Sallie Mae’s DMO is one of the
leading default aversion and collections operations in America,
serving a combination of federal, state, consumer and higher
education clients across a variety of asset classes. We have
more than 3,500 employees supporting our DMO clients.
We also provide services to a number of the nation’s
largest guarantors of student loans and the Department of
Education’s direct loan program. We have consistently
demonstrated top rankings by these agencies.
One of our 2005 DMO highlights was Indiana’s tax
amnesty program. Thanks to the teamwork and efforts of
many parts of the organization, we helped the state collect
more than $255 million in back taxes — nearly four times
the state’s goal. We also were proud to learn recently that one
of our subsidiaries, Pioneer Credit Recovery, was recently
selected by the U.S. Department of Treasury to collect undis-
puted defaulted personal income tax on behalf of the Internal
Revenue Service. We plan to begin work on the contract later
this year.
Reauthorization
After more than two years of debate on Capitol Hill, the Title
IV loan programs for America’s students and families were
reauthorized when President Bush signed the Deficit
Reduction Act of 2005 on February 8, 2006. The legislation
reduces the federal deficit by nearly $40 billion, with almost
$12 billion coming from the federal student loan programs
over the next five years.
We recognize that different higher education
institutions have different needs and we
are committed to responding to them with
tailored support and expertise.
Today, Sallie Mae’s DMO is one of the lead-
ing default aversion and collections opera-
tions in America, serving a combination of
federal, state, consumer and higher educa-
tion clients across a variety of asset classes.
While the legislation makes significant cuts to the student
loan program, many of the changes are consistent with Sallie
Mae’s initial recommendations to Congress, including
increased federal loan limits for first- and second-year stu-
dents, elimination of origination fees on Stafford loans and
return of the loan consolidation program to its original debt
management purpose.
Establishing clarity in the student loan program through
2012 is certainly good news for students, families and the
higher education community.